DC Limited invited applications for issuing 3,75,000 equity shares of ₹ 10 each at a premium of ₹ 5 per share. The total amount payable was ₹ 9 per…
CA Foundation · Accounting · RTP · September 2026
DC Limited invited applications for issuing 3,75,000 equity shares of ₹ 10 each at a premium of ₹ 5 per share. The total amount payable was ₹ 9 per share (including premium) on application and allotment and balance on the First and Final Call Applications for 15,00,000 equity shares were received. Applications for 10,00,000 equity shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 7,500 shares applied by Mr. Sunil. His shares were forfeited. The forfeited shares were re-issued at a discount of ₹ 4/- per share. Pass necessary journal entries for the above transactions in the books of DC Limited.
Suggested Answer and Working Notes:
Journal Entries in the books of DC Ltd. Sr. No. Particulars L/F Debit (₹) Credit (₹) 1 Bank A/c (15,00,000 × ₹9) Dr. 1,35,00,000 To Equity Share Application & Allot. A/c 1,35,00,000 (Being application money received) 2 Equity Share Application & Allot. A/c Dr. 1,35,00,000 To Equity Share Capital A/c (3,75,000 × 4) 15,00,000 To Securities Premium A/c (3,75,000 × 5) 18,75,000 To Bank A/c (10,00,000 × 9) 90,00,000 To Equity share First & Final Call A/c 11,25,000 (Being application and allotment money transferred, adjusted and excess amount refunded) 3 Equity Share First & Final Call A/c Dr. 22,50,000 To Equity Share Capital A/c 22,50,000 (Being call money due) 4 Bank A/c (WN 1) Dr. 11,08,125 Calls-in-arrears A/c Dr. 16,875 To Equity Share First & Final Call A/c (WN 1) 11,25,000 (Being first and final call money received) 5 Equity Share Capital A/c (5,625 × 10) Dr. 56,250 To Calls-in-arrear A/c (WN-2) 16,875 To Forfeited shares A/c 39,375 (Being shares of Mr. Sunil forfeited) 6 Bank A/c (5,625 × 6) Dr. 33,750 Forfeited shares A/c Dr. 22,500 To Equity Share Capital A/c (5,625 × 10) 56,250 (Being shares reissued) 7 Forfeited Share A/c Dr. 16,875 To Capital Reserve 16,875 (Being shares forfeiture transferred to Capital Reserve) Working Note: Calculation of Amount due on first and Final Call Application money received (5,00,000x9) 45,00,000 Amount due on application (33,75,000) Excess money adjusted in First and Final Call 11,25,000 Amount due on First and Final Call 22,50,000 Excess amount received on Share application and Allotment adjusted in First and Final Call (11,25,000) Amount due on First and Final Cal 11,25,000 Calculation of Calls-in-arrears of Mr. Sunil Sr. no. Particulars Amount in ₹ i. Application Received 7,500 ii. Allotment of shares (7,500 × 3,75,000 / 5,00,000) 5,625 iii. Application and allotment money received (i × 9) 67,500 iv. Application and allotment money due (ii × 9) 50,625 v. Excess adjusted in first and Final Call (iii – iv) 16,875 vi. First and Final Call Money due (ii × 6) 33,750 vii. Adjustment in First and Final Call: (v) 16,875 viii. Arrears (vi – vii) 16,875
Topics: Issue, Forfeiture and Re-issue of Shares
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